Case 5: Corporations
Which of the following statements concerning cumulative preferred stock is correct? Why
is this correct? Why are the others not correct?
Answer (d) is correct. Preferred stock represents a contribution to capital, and just like common
What type of instrument is this?
This instrument is a draft. More specifically it is a time draft, because the time for payment is
indicated on the draft. A draft is an order to pay and involves three parties: the party who orders
the payment (drawer), th
1. Classify each indorsement
a. David to Matthew
When David writes his check to Matthew as payable to the order of Matthew, he is
creating a special indorsement, because he is specifically identifying the person to whom
the instrument is to be payable to.